ABB plans expansion in U.S., scouting for acquisitions, CEO says

7 September 2017

ABB Ltd plans to expand its U.S. industrial robot factory in Michigan, the company’s chief executive officer said on Wednesday, while declining to comment on reports that he is weighing the purchase of a unit of rival General Electric Co (GE.N).

Ulrich Spiesshofer, who took over as CEO of ABB in 2013, said in an interview that the company plans to expand its industrial robot manufacturing facility in Auburn Hills, Michigan, which delivered its first robot in March. He declined to offer details on new jobs or investment. ABB currently has a workforce of about 1,000 at the Auburn Hills complex.

Zurich-based ABB is counting on continued growth in demand for industrial robots from automakers and other sectors, such as the food and beverage industry, Spiesshofer said.

U.S. automakers have caught up with Japanese and German rivals in the level of factory automation, Spiesshofer said. “The next phase is about portfolio differentiation and expansion,” as automakers build more electric cars, he said.

Spiesshofer has been reshaping ABB’s portfolio of businesses through acquisitions and divestitures for the past four years. He declined to comment on whether he is discussing the acquisition of GE’s industrial solutions business.

People familiar with the situation said last month that GE and ABB had restarted talks after GE cut the asking price of the business, which sells industrial electrical equipment.

ABB is scouting for potential acquisitions in certain areas, such as planning software, and those would likely be smaller deals, Spiesshofer said.

ABB will be “brutally disciplined” in what it buys, he said, noting that the company “could have afforded” to buy industrial robot maker Kuka last year, but walked away “because the economics did not fit what we want to do.”

In a presentation on Wednesday, Spiesshofer reaffirmed that, after what he called a “transitional year” in 2017, ABB should begin hitting its goals for revenue growth of 3 to 6 percent, and returns on capital investments in the “mid-teens.”

Spiesshofer said problems with excess capacity in the robotics and motion business that hit second-quarter results should be resolved by growth in business.

“I am confident for the full year we will be back” within a profit margin range of 15 to 18 percent, he said. Operating margins for ABB’s robotics and motion business were 14.9 percent in the second quarter.